Lender reports "sharp fall" in hardship applications

Result credited to addressing customer's unique circumstances rather than ushering all into default six-month pause

Lender reports "sharp fall" in hardship applications


By Madison Utley

A non-bank lender has reported the number of new applications received for COVID-19 related hardship arrangements has fallen faster than the group expected.

According to Firstmac managing director Kim Cannon, a “full analysis” of the trusts in its $12.8bn loan book have shown the impact of the crisis is not accelerating in the way investors feared at the outset of the pandemic.

“COVID-19 hardship requests peaked in late March, coinciding with the federal government’s announcement of the JobKeeper package,” Cannon said.

“From that time, new COVID-19 hardship requests have only continued on very low daily increments. The balance as at 31 May 2020 was 5.65%, up only slightly from 5.32% last month.”

“Our trusts can withstand stress levels many times higher than the current levels experienced,” he added. 

The group attributes its successful minimisation of the detrimental impact of COVID-19 to the way its approach to the issue has differed from other lenders’ right from the beginning.   

“From the outset, we worked with each customer individually to help them tailor the best arrangement for their unique circumstances, instead of just ushering them through into a default six-month hardship arrangement,” said Cannon.

“We will continue that tailored approach next month when our three-month hardship arrangements come up for review, working with each person to ensure that they are making whatever level of repayments they are comfortable with, leaving them better off in the long run.”

Of the 5.65% of customers currently on hardship arrangements, only 1.88% were in 30+ days in arrears as many of the accounts were in advance or making partial payments.

Just 56% of the small percentage of customers on harship arrangements have been unable to make any payment during the initial three month period.

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